Which of the following statements is (are)correct?
A)There is no fundamental difference between the monetarist and the Keynesian theories regarding whether business cycles are demand-driven or supply-driven.
B)In both the monetarist and Keynesian models,changes in the expected price level play an important role in the position of aggregate supply.
C)In both the monetarist and Keynesian models,the assumption of constant velocity is critical.
D)Both a and b
E)Both a and c

Question

Quizplus · Accepted Answer

Monetarist and Keynesian theories fundamentally differ in their views on whether business cycles are demand-driven or supply-driven. Monetarists, following Milton Friedman, often emphasize the role of monetary policy and suggest that changes in the money supply are the main cause of economic fluctuations, which is a demand-side perspective. Keynesians, following John Maynard Keynes, focus on how changes in aggregate demand can lead to cycles of recession and expansion, also a demand-side view but with a different approach to addressing it. Thus, statement A is incorrect because it suggests there is no fundamental difference between the two theories on this point, making it the correct choice as it is the statement that is asked to be identified.

Which of the Following Statements Is (Are)correct